Adapting to U.S. Semiconductor Policy Shifts in 2025
Policy, not just innovation, is the dominant force shaping global competitiveness in the chip industry in 2025. The U.S. government is pursuing a dual-pronged strategy, imposing steep tariffs to spur domestic manufacturing while simultaneously attempting to reopen access to key global markets by rolling back Biden-era chip export rules before they even go into effect.
These mixed signals are forcing manufacturers, OEMs, and procurement teams to rethink their strategies. In a year where policy decisions are moving faster than supply chains can adapt, flexible sourcing plans and strong global partnerships are more important than ever.
Impending U.S. Semiconductor Tariffs and Their Impact on Fab Construction
With the U.S. preparing to finalize a new round of tariffs aimed at the semiconductor industry, global chipmakers are bracing for another wave of cost pressures. This comes as the Department of Commerce closed its public comment period for the proposed tariffs on May 7th. Stakeholders are now weighing the potential financial and operational fallout.
Semiconductor manufacturing and the construction of new fabs is capital intensive, which warps the impact any new tariffs may have. According to the Semiconductor Industry Association (SIA), a seemingly modest 1% hike in duty rates on chip related materials would raise fab construction costs by 0.64%.
When considering a 10% tariff scenario, which the Trump Administration has repeatedly discussed, a project like TSMC’s $100 billion U.S. expansion plan would require an injection of another $6.4 billion. Should Washington impose tariffs to this extent, it would compound a stark cost disadvantage for U.S. chip production. Building and running fabs in the U.S. is already estimated to be 30-50% more expensive than doing so in Asia, and new tariffs will only worsen the disparity.
Enacting new semiconductor tariffs would threaten the economics of reshoring the chip industry—a stated goal of the Trump administration’s tough stance on global trade. In essence, the U.S. risks neutralizing its own industrial incentives, such as the CHIPS Act, by inflating construction and operating costs through new tariffs.
For companies manufacturing advanced AI chips and high-performance nodes for other applications, these policies introduce friction at a moment when time-to-market advantages are paramount.
Moreover, the downstream implications of increased costs aren’t linear. Economic models suggest that for every $1 increase in semiconductor prices, the cost of end goods could rise by as much as $3 to preserve current profit margins. The result would be a steep price increase on consumer electronics, automotive systems, and enterprise-grade hardware.
Against this backdrop, global sourcing agility is becoming more imperative by the day. Sourceability offers procurement leaders a hedge against tariff-induced price shocks through its expansive and transparent supplier network. This enables buyers to tap into more affordable supply routes and locate price-stable alternatives without compromising quality or compliance.
As the U.S. decides how it will handle tariffs on the chip industry, semiconductor firms must act decisively to balance geopolitical alignment with wise price acquisition strategies.
Rescission of Biden-Era AI Chip Export Restrictions
Aside from its own initiatives, the Trump administration has worked quickly to undo many Biden-era policies during its first few months in office. Now, another change is coming as the White House has announced plans to rescind the “AI diffusion rule.”
The set of complex export rules was intended to limit foreign access to advanced U.S.-made AI chips, expanding restrictions beyond those put on China in 2022. After being unveiled during the final week of the Biden presidency, the AI diffusion rule was set to go into effect on May 15th, 2025. However, the Trump administration does not plan to enforce the rule while it drafts its own set of guidelines.
U.S. Under Secretary of Commerce for Industry and Security Jeffery Kessler said in a statement, “The Trump Administration will pursue a bold, inclusive strategy to American AI technology with trusted foreign countries around the world, while keeping the technology out of the hands of our adversaries.”
Kessler also called out the administration’s intent to “Replace it [Biden’s AI diffusion rule] with a much simpler rule that unleashes American innovation and ensures American AI dominance.”
Critics of the AI diffusion rule, both within the government and in the tech sector, warned that the regulation’s overly broad, tiered licensing framework risked paralyzing legitimate business activity. AI industry leaders, including Nvidia and AMD, raised the alarm early. The former reported a staggering $5.5 billion in lost revenue potential as a result of AI chip restrictions affecting its ability to sell certain high-end chips in China.
The Trump administration’s decision to abandon the AI diffusion rule signals a major policy pivot that carries far-reaching implications for the semiconductor ecosystem and global trade in AI technologies. The move isn’t about softening export rules. By contrast, Washington has cracked down on global trade, implementing multiple waves of tariffs on goods from practically every U.S. trade partner.
As for AI regulation, Trump plans to focus on direct state-to-state negotiations, including talks with the United Arab Emirates and Saudi Arabia. Both countries were jaded by the original AI diffusion rule as it limited their access to AI components.
Denying China access to AI hardware has been a rare area of common ground between the Biden and Trump administrations. However, regulating high-end chip shipments to places outside of China is a complex political debate.
Individual deals could give Washington more leverage while preserving commercial opportunities for U.S. firms in allied markets. However, the shift introduces legal ambiguity, particularly for compliance and export teams that had spent months planning for the Biden-era framework. Many companies built their 2025 strategies around the assumption that AI chip sales would be heavily restricted in numerous foreign markets. That uncertainty now forces another round of recalibration—a recurrent theme of the past year.
Beyond compliance, nixing the AI diffusion rule is expected to reinvigorate global demand for U.S.-made AI chips. Governments and companies that were previously sidelined are likely to resume procurement negotiations, potentially accelerating AI infrastructure buildouts in regions previously deemed gray areas under Biden-era rules.
For companies like Nvidia and AMD, this could unlock billions in new revenue. However, with supply already tight due to booming demand from U.S.-based AI projects, sourcing constraints will become a dangerous bottleneck in the coming months.
To navigate this challenging landscape, procurement leaders must prioritize strategic sourcing relationships that can adapt to geopolitical upheaval in real time. Sourceability’s global sourcing platform offers access to diversified suppliers and cutting-edge market intelligence tools, allowing customers to maintain access to critical AI components regardless of regulatory changes or inventory flux.
